Post on 17-Jan-2016
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How do Asia/Pacific countries compare?
Raymond Torres, OECD
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Asia/Pacific countries do relatively well
Source: OECD (2005), OECD Employment Outlook , OECD, Paris.
Proportion of persons of working age (15-64) who don't have a job
%
0
10
20
30
40
50
60
OECD average EU-19 average
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Ageing is a common challenge to all A. Labour force growth will slow dramatically …
Annualised percentage changes
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Australia Canada Japan Korea New Zealand United States European Union OECD
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Asia/Pacific economies grow fast (except Japan)
av. 1992-2002 2003 2004
Canada 3.6 2.0 2.8Mexico 2.7 1.4 4.4United States 3.2 3.0 4.4Japan 1 1.5 2.6Korea 5.6 3.1 4.6Australia 3.9 3.6 2.9New Zealand 3.7 3.3 4.4
EU-19a 2.3 1.1 2.2
OECDa 2.7 2.1 3.4
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Key issue in the JS reassessment: are welfare benefits and regulations bad for jobs?
Welfare benefits may inhibit work incentives
Labour regulations (minimum wages, dismissal regulations, etc.) may:
make employers reluctant to hire (lower labour demand); and
slow down allocation of resources (lower labour productivity
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Point 1: If well designed, welfare benefits may promote labour supply
The “mutual obligations” approach
Governments offer good re-employment services, financial incentives to work, non-financial services like child-care – the “rights”
Beneficiaries should take active steps to find work – the “obligations”
This may require a minimum wage set at right level
= > This can be very effective to bring disadvantaged groups into employment
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Absent from work owing to sickness and related reasonsb Education participation ratec
Benefit dependency rate
Other
Chart 1. In some countries, most non-employed adults receive a benefitPercentages of working-age population,a 1999
Employment rates, net of absence from work owing to
sickness and related reasonsd
%
0
10
20
30
40
50
60
70
80
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Source: OECD (2004), Benefits and wages , Paris.
The OECD summary measure is defined as the average of the gross unemployment benefit replacement rates for two earnings levels, three family situations and three durations of unemployment.
Benefit entitlements are less than OECD average
%
0
10
20
30
40
50
60
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Asia/Pacific spending on ALMP is less than average
Source: OECD Database on Labour Market Programmes.
Expenditure on active labour market programmes Percentage of GDP
%
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
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Point 2: Employment regulations can be made consistent with employment
Overly rigid dismissal regulations can be big problem
It can inhibit job creation, Contribute to labour market duality and Reduce mobility
But some degree of regulation can help
This will force firms to internalise cost of dismissal decisions: see Austrian reform, experience rating in the US
Helps find better job match (productivity)
=> Wage flexibility and/or training needed
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a) Countries are ranked from left to right in ascending order of the overall summary index.
Source: OECD (2004), Employment Outlook , Chart 2.1, Paris.
US, Canada, NZ, Australia have low EPL, Japan and Korea average, Mexico high
Protection of regular employment against individual dismissal, 2003 (Scale 0-6)
0.0
0.2
0.4
0.6
0.8
1.0
1.2
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0
Regulation of temporary forms of employment, 2003 (Scale 0-6)
Regular work total
-1.5
0.5
2.5
0.0 0.5 1.0 1.5 2.0 2.5
Regular work individual
EPL overall including collective dismissal (version 2), 2003 (Scale 0-6)
0.0
1.0
2.0
3.0
4.0
5.0
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0
EPL overall excluding collective dismissals (version 1), 2003 (Scale 0-6)
Regular work total
-2.5
2.5
0.0 0.5 1.0 1.5 2.0 2.5
Temporary work
Regular work individual
0.0
2.0
0.0 0.2 0.4 0.6 0.8 1.0 1.2
Temporary work
Regular individual
-2.5
2.5
0.0 0.5 1.0 1.5 2.0 2.5
Temporary
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
2003(Scale 0-6)
Regulation on temporary forms of employment
Specific requirements for collective dismissal
Protection of regular workers against (individual) dismissal
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Union density and collective bargaining coverage in Asia-Pacific are low (except
Australia)23456789
1011121314151617
Percentage of wage and salary earners
Australia
Austria
Belgium
Canada
Czech Republic
Denmark
FinlandFrance
Germany
Hungary
Italy
Japan
Korea
Luxembourg
Netherlands
New Zealand
Norway
Poland
Portugal
Slovak Republic
Spain
Sweden
Switzerland
United Kingdom
United States
0
10
20
30
40
50
60
70
80
90
100
0 10 20 30 40 50 60 70 80 90 100Trade union density (%)
Col
lect
ive
barg
aini
ng c
over
age
(%)
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Big shift away from low-educated employment…
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Training reduces the risk of unemployment Low-estimate of the probability change High-estimate of the probability change
13141516171819202122232425262728-1
-0.8
-0.6
-0.4
-0.2
0
0.2
0.4
Austria Belgium Denmark Finland France Germany Greece Ireland ITALY Netherlands Portugal Spain
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Pros and cons of different strategies
First option: not doing anything…
“deregulation” approach (low benefits, low EPL) :
enhances work incentives and labour demand
cheap for public purse
But not enough in certain cases (lone parents) ...
... And does not help improve career prospects and may lead to labour market insecurity
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Flexicurity (adequate benefits, strong activation, low EPL) - anglo-saxon countries moving in this direction?
Promotes participation
Reduces demand-side barriers
But it is costly and complex vis-à-vis deregulation…
… And it implies workers accepting low EPL
=> Ok if evaluation in place, social consensus and training providing by government
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Internal flexibility (high EPL for regular workers, wage flexibility, firm-training)
Promotes adjustment within firms through wage flexibility (Japan, Korea -- Mexico?)
Maintains employment security
But at the cost of duality (rising incidence of non-regular jobs) …
=> Requires innovative ways to provide EPL
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Thank you